Fees, Mortages and Power

I don’t know what shocks people in Washington more: the fact that Congress is willing to abdicate virtually all of its powers over consumer protection laws to one independent agency or the fact that Richard Cordray is that rarest of public officials who is actually using these powers to do exactly what the Bureau was set up to do. The latest example of this disconnect between Congress and the Bureau can be seen in two examples that have a direct impact on credit unions.

First, with the Integrated Mortgage Disclosure rules that take effect on August 1, Congressmen are urging the CFPB to codify a delay in the enforcement of these rules. The CFPB has made it clear that while it expects nothing more than a good faith attempt on the part of lenders to comply with these requirements, it sees no need or benefit to the consumer in further pushing back the implementation date. For those of you who still haven’t decided how you are going to comply with these requirements, God Speed and good luck!

A second example of the CFPB’s enormous powers is demonstrated in the emerging debate over over-draft fees. The CFPB prides itself on being a data driven organization. As reported earlier this week in the CU Times, in November 2014, it demanded that payment processes provide information to the Bureau about the order in which banks and credit unions clear checks. From the CFPB’s perspective, it makes a heck of a lot more sense to go to a handful of companies to get this information rather than demand it of every financial institution in the country. The problem is that this kind of huge fishing expedition costs money and, assuming that the Bureau that Never Sleeps isn’t about to reimburse Fiserv and others for the cost of this research, someone’s going to have to pay for it.

What these two examples have in common is that they underscore that Congress has given too much power to a single Bureau and ultimately a single person. For example, Section 1022 of the Dodd-Frank Act provides that the Bureau may require covered persons and service providers participating in the consumer financial services market to answer specific questions in the form prescribed by the Bureau. In other words, the Bureau may ask for anything that directly or indirectly can help it monitor the provision of consumer services.

I don’t begrudge the Bureau for exercising this power. Instead, my new gripe is with Congressmen who pretend as if they are powerless to do anything about it. The CFPB is here to stay; but, there is nothing to stop Congress from re-examining and restricting some of the powers it has given the Bureau.